A firm that can sell as much as it can produce at the market price is likely operating in:
A. a perfectly competitive market.
B. a monopoly
C. a monopolistically competitive market.
D. an oligopoly
Answer: A
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"Any social planner who implements efficient outcomes will produce the same output in a given market as the competitive market would." In addition to the conditions of the first welfare theorem, which of the following have to hold in order for the statement in quotes to be true?
A. Consumer tastes are quasilinear. B. Consumer tastes are homothetic. C. Production frontiers are homothetic. D. Both (a) and (c). E. Both (b) and (c). F. None of the above.
Consider the case of two farmers, Tony and Hakim, depicted in the following figure. Both use DDT (a chemical pesticide) for their crops. The use of DDT causes an externality for swimmers down river from the farms.
(a) Show the amount of pesticides used if each uses the privately optimal level of pesticides.
(b) Show the amount of pesticides used if they are socially concerned.
(c) Why is a reduction back to X H = H T not socially desired?
The expected inflation rate is the inflation rate that people forecast and use to set the? _____ and? _____.
Fill in the blank(s) with the appropriate word(s).
The greater the degree of economic integration between markets in the home country and the base country:
A) the greater the volume of transactions and the greater the benefit to the home country of fixed exchange rates. B) the smaller the volume of transactions and the lesser the benefit to the home country of fixed exchange rates. C) the greater the volume of transactions and the greater the benefit to the home country of flexible exchange rates. D) the less important the volume of transactions and the greater the importance of ethnic similarities.